What is SPV?

A Special Purpose Vehicle (SPV) is a legal entity created for a single investment purpose. In pre-IPO investing, SPVs pool capital from multiple investors to meet minimum investment requirements that individuals couldn't meet alone.Why it matters: Many pre-IPO opportunities have $100K-$1M minimums. SPVs let you invest $5K-$25K alongside others, democratizing access to deals previously reserved for institutions.How it works:Formation: Organizer creates LLC or LP structurePooling: Multiple investors contribute capitalInvestment: SPV invests in target company as single entityReturns: Profits distributed proportionally minus feesFees: Typically 0-2% management fee + 10-20% carry (share of profits). Always understand the fee structure before investing.SPVs in practice: An SPV organizer — often an angel investor, syndicate lead, or investment platform — identifies a deal, negotiates terms, and then opens the vehicle for other investors to participate. Capital is pooled into the SPV's bank account, and the entity makes a single investment on behalf of all participants. Fee structures vary: some charge only carry (a percentage of profits, typically 20%), while others layer on setup fees and annual management fees that can erode returns on smaller allocations. Increasingly, tokenized SPVs are emerging on blockchain platforms, representing fractional ownership via digital tokens. These tokenized structures offer faster settlement, global investor access, and programmable distribution of returns through smart contracts, bridging traditional private equity structures with decentralized finance.